EDITORIAL: End car tax, but help towns replace revenue

Connecticut Gov. Dannel P. Malloy should stand firm on his plan to eliminate the bulk of Connecticut's property tax on automobiles.

The immediate positive impact it will have on working families struggling in this economy is worth the difficult choices it will force state lawmakers and municipal leaders to make.

Malloy has proposed exempting the first $28,000 in automobile value from the state's car tax, effectively ending it for 90 percent of the population.

The car tax is one of Connecticut's worst and most regressive ways of generating revenue.

Advertisement

It disproportionately penalizes those who are least able to afford it. Ownership of a car has little relation to income. In most of Connecticut, you need a car to be able to work. And because it is based on local property tax rates, which vary wildly, low-income families in Bridgeport or New Haven are paying far more in taxes on the same car than wealthy families in the suburbs.

The problem with Malloy's proposal is that the car tax funds local, not state government, and he is offering Connecticut's cities and towns no replacement for the $560 million generated by it each year.

Inevitably, that will mean shifting the burden from car owners to homeowners (minus the savings possible from eliminating costs associated with collecting the car tax). It's still a more fair way to raise revenue than having a car tax, but the impact will be disproportionately significant in communities with weak commercial real estate tax bases and high numbers of rental properties vs. single family homes.

The lowest-impact solution would be to raise the money through an increase in the state income tax and distribute it back to communities in grants equal to what they used to raise from it.

If that's too big a political risk for the governor, we'd suggest expanding local government's ability to raise revenue in other ways. A local-option sales tax, for example, could provide property tax relief and funding for long-neglected infrastructure improvements in communities with a retail base.